How Much Does It Cost to Own a Car?

Article overview

• The true cost of car ownership: Owning a car costs an average of $11,577 annually in 2025, including expenses like depreciation, fuel, insurance and maintenance.
• Vehicle choice matters: Different vehicle types, like sedans, trucks and EVs, have varying long-term costs, making it essential to choose a car that fits your needs and budget.
• Budgeting for maintenance: Regular mileage-based maintenance (e.g., 30,000, 60,000 and 90,000-mile services) is crucial for keeping your car running well and avoiding costly repairs.

The cost of owning a car

Owning a car is important for work, family and independence, but it’s important to understand that the costs go far beyond the sticker price.

Whether you’re a first-time buyer, helping someone else navigate the process, or simply looking to budget for a new vehicle, taking the time to analyze the true financial impact of car ownership is a crucial first step.

No matter what your situation, understanding the overall costs such as insurance, maintenance, fuel and depreciation can help you make informed decisions and avoid surprises down the road.

By breaking down these expenses, you’ll be better equipped to budget effectively and choose a car that fits your financial goals.

Understanding the annual cost of a new car

Each year, AAA analyzes vehicle ownership expenses to help drivers understand the financial commitment. The 2025 Your Driving Costs analysis revealed that the total average cost of owning and operating a new vehicle is $11,577 per year, or about $965 per month. This is a decrease from the previous year, driven by lower depreciation, reduced fuel prices and a trend toward more affordable vehicle choices.

While a drop in ownership costs is good news, it's important to look at all the expenses involved before heading to the dealership. Let's break down where that money goes.

Breaking down the expenses

Several key factors contribute to the total cost of owning a car. Some are obvious, like fuel, while others, like depreciation, are less visible but just as significant. The analysis assumes a driver travels 15,000 miles per year over a five-year ownership period.

Here are the main expenses that make up the total cost:

• Depreciation: This is the difference between what you paid for a car and what it's worth at any given time while you own it. It's the single largest cost of ownership. In 2025, new vehicles lost an average of $4,334 in value per year.

• Fuel: This cost depends on fuel prices, your car’s fuel economy and how much you drive. For 2025, the average fuel cost dropped to 13.0 cents per mile.

• Insurance: Your policy cost is a major yearly expense. It's influenced by your vehicle type, driving record and location.

• Maintenance, repairs and tires: This includes everything from routine oil changes to unexpected repairs that keep your car running safely.

• Finance charges: If you take out a loan to buy your car, this is the amount you pay in interest. Estimated finance costs for 2025 decreased to $1,131 for the year.

• Taxes and fees: This includes sales tax at the time of purchase and annual costs for licensing and registration.

How vehicle choice impacts your budget

The type of vehicle you choose has a massive impact on your long-term costs. It's important to select a car that fits your actual transportation needs to avoid unnecessary expenses.

For instance, a pickup truck is great for hauling heavy loads, but it comes at a higher price. Owning a new pickup truck can cost an additional $6,402 per year compared to a small sedan. A small sedan operates at just 55.87 cents per mile, which is 43% less than a pickup.

What about electric and hybrid vehicles?

Electric vehicles (EVs) and hybrids are becoming popular options for drivers looking to save on gas and reduce maintenance.

• Electric vehicles (EVs): EVs have the second-lowest maintenance costs of all vehicle categories. While electricity prices rose slightly in 2025, EVs still offer fuel savings compared to gas-powered cars. However, their higher initial ownership costs (depreciation, insurance, etc.) can make them more expensive overall in the current market.

• Hybrid vehicles: Hybrids offer the lowest maintenance fees and share similar fuel cost benefits with EVs. They provide a great balance for drivers who want better fuel economy without committing to a fully electric vehicle.

When comparing models, remember to look at the total picture. While EVs have lower "operating costs" (fuel and maintenance), their "ownership costs" (depreciation, insurance, fees) are currently higher than their gas-powered counterparts.

Budgeting for a car: A guide for first-time owners

Owning a car is a significant financial commitment, and understanding the costs involved is essential for anyone looking to budget effectively, whether you're a first-time buyer or simply trying to make informed decisions. The best way to start is by being prepared and exploring the true cost of car ownership.

1. Use a driving cost calculator: Tools like AAA’s online driving costs calculator can provide a personalized estimate. You can input details such as your state, annual miles driven and the specific year, make and model of a car you’re considering.
2. Run a sample calculation: Try using the tool with your current or a hypothetical vehicle to see how the numbers add up. This can make the costs feel more tangible and relatable.
3. Analyze the results: Review the cost breakdown for a car you’re interested in. For instance, a 2025 Ford Escape AWD might have an annual cost of around $10,920, with a five-year total exceeding $54,000. Seeing these figures can help you plan for the long-term financial impact.
4. Prepare for questions: Be ready to explore topics like depreciation, fuel costs and why insurance rates can vary based on factors like age, driving history and location.

Once you’ve budgeted for the overall cost of owning a car, it’s time to think about ongoing expenses, such as mileage-based maintenance. Regular upkeep is key to keeping your car running smoothly and avoiding unexpected repair costs.

Don't forget about mileage-based maintenance

All vehicles require regular service to stay in good shape. These service benchmarks, often at 30,000, 60,000, and 90,000 miles, are crucial for protecting the investment but come with a cost.

• 30,000-mile service: Expect tire rotations, oil changes and inspections of filters, fluids and belts. This service can cost between $200 and $500.

• 60,000-mile service: This often includes more involved tasks like changing the transmission fluid and inspecting the brake, fuel and ignition systems. The cost can range from $900 to $1,900 for some models.

• 90,000-mile service: This major service may involve replacing key components like the timing belt, spark plugs and water pump, along with in-depth inspections. Costs can be like the 60,000-mile service.

Learning to budget for these milestones is essential. It reinforces the idea that owning a car is an ongoing commitment.

Your next steps

Buying a vehicle is a long-term financial commitment, not just a one-time purchase. Understanding the ongoing costs such as maintenance, insurance, fuel and unexpected repairs can help you prepare for the responsibilities of car ownership. By approaching car ownership with a clear understanding of the costs involved, you’re setting yourself up for success.